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Friday, 13 November 2015

The week of WIPO love continues. This time it's the World Intellectual Property Report 2015, launched yesterday. Published every two years, the report looks at trends and interesting topics in IP (2013 on brands, 2011 on changing innovation.) 2015's theme is 'Breakthrough Innovations' and examines key technologies that have had transformative economic effects.

The report's concept is to gain better understanding of how breakthrough innovations come about and the relationship with IP. WIPO DG Gurry describes intellectual property as an, "essential but not sufficient condition or component of a healthy innovation ecosystem. However, the way in which it operates to support innovation is complex and it does vary across technologies and different forms of intellectual property." WIPR 2015 builds on these themes.

Lead by Chief Economist Carsten Fink and his intrepid team of economists, the report develops six case studies -- three past and three current breakthrough technologies -- to trace their economic impact and the factors which facilitated their development. The three historical are airplanes, antibiotics and semiconductors; the three current are 3d printing, nanotechnology and robotics. Each of these case studies is detailed from a historical perspective, complemented with statistical analysis of related patents and patent mapping, and an analysis of the relationship between the innovation and IP. It is hard to do such an in-depth report justice in a blog posts, so I've selected some highlights.

The report notes innovation systems evolve over time, and what was true for the early stages of airplanes, antibiotics and semiconductors may not be true in the present. Antibiotics demonstrate this. The report details antibiotics' incredible impact on global life expectancy and its essential role in the development of the modern pharmaceutical industry. The disruptions caused by war were crucial to spurring drug development. Given the rise of Anti-Microbial Resistance (AMR), it is also rather worrying to appreciate how important antibiotics are. The development of new antibiotics is a challenge (the ABPI highlighted yesterday the UK's skill shortage in new medicine development.)

The report finds three ingredients key to creating a successful innovation system:

Government support and funding for scientific research and support for the development of research (*cough* UK spending review *cough*)

Competitive market forces and firm action

Good linkages between innovation actors (e.g. open innovation and knowledge exchange)

The report is likely to be poured over by governments evaluated their domestic innovation. Statistical analysis finds that six countries (Japan, US, Germany, France, the UK and the Republic of Korea) account for 75% of all patents for the three current innovations. In recent years, China is becoming increasingly active in patenting in these technologies.

Some Thoughts

WIPR 2015's analysis stem from the six case studies. An advantage of case studies is that they provide what is typically referred to as, "richness." The report builds each case by complementing qualitative research with quantitative analysis of patent filings. As a methodology, case studies are helpful illustrations and can be incredibly useful in discovering and positing potential policy insights in a resource efficient manner.

Super cool but too large for blog infographic,
WIPO, click for full size

A disadvantage with case studies is that, with a small sample size, the analysis could identify such unique cases that the findings are not relevant elsewhere. Indeed, the very choice of 'breakthrough' innovations results in a selection process favourable to success; analysis may fail to identify technologies which would have been breakthrough, but didn't materialise because of different reasons. This is a fairly lazy critique as the alternative, finding these 'failed' counterfactual case studies, is nigh impossible.

Fundamentally, case study research like the WIPR suggests theories and policy interventions. It's inductive (starts with observations) as opposed to deductive (starts with theory) research. This is an important part of the research process to inform policy. However, like most research, analysis can be insightful but limitations should not be overlooked. This is noted in the report, which describes the findings as 'food for thought.' Indeed. The successful nurturing of innovation systems is tricky, and, despite our protestations, economists know surprisingly little about what works and why in innovation.

For readers looking for more stats (who isn't!), the next WIPO economics and stats report is the December publication of the World Intellectual Property Indicators.

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